Baruch College, CUNYACCT 3202Chapter 10 - Test Bank(Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition)

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1. Property, plant, and equipment and intangible assets are long-term, revenue producing assets. True False 2. Sales tax paid on equipment acquired for use in the business is not capitalized. True... False 3. Demolition costs to remove an old building from land purchased as a site for a new building are considered part of the cost of the new building. True False 4. The initial cost of property, plant, and equipment includes all the identifiable expenditures necessary to bring the asset to its desired condition and location for use. True False 5. A distinguishing characteristic of intangible assets is the degree of uncertainty about when or if they will provide future benefits. True False 6. Costs incurred after discovery of a natural resource but before production begins are reported as expenses of the period in which the expenditures are made. True False 10-1 Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition 7. The relative fair values are used to determine the valuation of individual assets acquired in a lump-sum purchase. True False 8. The fair value of the asset, debt or equity securities given in a noncash acquisition should determine the value of the consideration received. True False 9. Under current GAAP, fair value is used to measure the components of all nonmonetary exchanges. True False 10. The capitalization period for a self-constructed asset ends either when the asset is substantially complete and ready for use or when interest costs no longer are being incurred. True False 11. The FASB's required accounting treatment for research and development costs often understates both net income and assets. True False 12. According to International Financial Reporting Standards, all research and development expenditures are expensed in the period incurred. True False 13. A company that prepares its financial statements according to International Financial Reporting Standards must calculate amortization of capitalized software development costs in the same way as under U.S. GAAP. True False 10-2 Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition 14. The successful efforts method of accounting for oil and gas exploration costs allows costs incurred in searching for oil and gas within a large geographical area to be capitalized. True False Matching Questions 15. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Average accumulated expenditures Account credited when assets are donated to a corporation. _2__ 2. Revenue-donation of asset Approximation of average outstanding debt if all construction funds were borrowed. ____ 3. Exchange of nonmonetary assets Both the total amount and the amount capitalized should be disclosed. ____ 4. Interest cost Asset received is measured at fair value. ____ 5. Franchise Right granted to use a trademark or tradename within a geographic area. ____ 16. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Trademark Exclusive right to display a word, symbol, or emblem. ____ 2. Noninterest-bearing note Generates inventoriable costs. ____ 3. Expected cash flow approach Incorporates specific probabilities of cash flows. ____ 4. R&D performed for others Its cost includes filling, draining, and removal of old structures. ____ 5. Land Valued at the fair value of the note or fair value of the asset received in exchange. ____ 10-3 Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition 17. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. 1. Amortization Point in time to begin capitalization of software development costs. ____ 2. Research and development costs Expensed in the period incurred. ____ 3. Natural resources The allocation of cost for intangible assets. ____ 4. Technological feasibility The basic principle is to value assets acquired using fair value of consideration given. ____ 5. Nonmonetary exchange Wasting assets. ____ 18. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. 1. Copyright A measurement of efficiency in using depreciable assets. ____ 2. Asset retirement obligations Exclusive right of protection given to the creator of a published work. ____ 3. Land improvements Measured at fair value and recognized as a liability. ____ 4. Fixed asset turnover ratio The basic principle is to value assets acquired using fair value of consideration given. ____ 5. Nonmonetary exchange Includes parking lots, fences, and driveways, lighting and sprinkler systems. ____ 19. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Goodwill Long-term assets that generally represent various types of rights. ____ 2. Depreciation Consideration given less fair value of net identifiable assets. ____ 3. Depletion The cost allocation of equipment. ____ 4. Patents The allocation of cost of natural resources. ____ 5. Intangible assets Protects against infringements on manufactured products. ____ 10-4 Chapter 10 - Property, Plant, and Equipment and Intangible Assets: Acquisition and Disposition 20. Listed below are ten terms followed by a list of phrases that describe or characterize five of the terms. Match each phrase with the correct term placing the letter designating the best term in the space provided by the phrase. 1. Software development costs Costs to bring back an asset to its original condition. ____ 2. Donated assets Revenue recorded upon receipt. ____ 3. Lump-sum purchase Exclusive right of protection given to the creator of a published work. ____ 4. Copyright Capitalized between points of technological feasibility and date of product release. ____ 5. Restoration costs Price allocated in proportion to relative fair values. ____ 21. Listed below are ten terms followed by a list of phrases that describe or characterize the terms. Match each phrase with the correct term by placing the letter designating the best term in the space provided by the phrase. 1. Nonmonetary exchange Expensed in the period incurred. ____ 2. Copyright Exclusive right of protection given to the creator of a published work. ____ 3. Average accumulated expenditures Incorporates cash flow probabilities into the analysis. ____ 4. Capital budgeting The basic principle is to value assets acquired using fair value of consideration given. ____ 5. Goodwill Includes parking lots, fences, and driveways, lighting and sprinkler systems. ____ 6. Start-up costs A unique intangible asset that is not separable from the company. ____ 7. Trademark Weighted average of construction expenditures. ____ 8. Lump-sum purchases An exclusive right to display a word, slogan, symbol or emblem. ____ 9. Expected cash flow approach The long-term asset acquisition decision. ____ 10. Land improvements Purchase price is allocated based on relative fair values. ____ Multiple Choice Questions [Show More]

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